TV rights fees dispute could fuel O's, Nationals rivalry

Off-the-field disagreement more interesting than on-the-field matchup

December 15, 2012|Peter Schmuck

There is some question whether the geographical proximity of the Orioles and Washington Nationals — and their annual home-and-home interleague series — combine to create a dynamic rivalry, but there is no denying that one has developed between the ownership of both franchises.

The long-running dispute over the value of the Nationals' television rights has done more to ramp up anti-Oriole emotion in Washington than anything that has happened between the two teams on the field, and this Mid-Atlantic misunderstanding has led to all kinds of speculation about the future of their unhappy cable partnership.

That's why there have been rumors that the Mid-Atlantic Sports Network might be for sale and a report Friday in the Washington Post said that Major League Baseball has enlisted the help of a commercial bank to find a buyer for MASN to end the acrimony.

If that comes as good news to National fans who would like to see their team untethered from the deal that allowed the Nats to settle in Washington seven years ago, it would be wise for them not to get too excited about it.

The Orioles love the deal, which was tilted heavily in their favor to compensate them for giving up their claim to the Baltimore/Washington television market, and continue to insist that they have no interest in selling the network.

"MASN is not for sale and has not been for sale,'' Orioles club counsel Alan Rifkin said Friday.

And, though baseball commissioner Bud Selig has been looking for creative ways to end this unpleasantness, there appears to be little more he can do than encourage the Orioles to voluntarily give the Nationals a bigger piece of the action. Good luck with that.

The contract that created MASN and was agreed upon by the Orioles, Major League Baseball and the Nationals is pretty much ironclad. It is believed to even include language that would prevent Selig from exercising his "best interests" powers to make any changes in it — not that he has indicated any intention to do that.

The reason for the Nationals' frustration is obvious and understandable. The Los Angeles Dodgers are close to signing a $6 billion TV rights deal with Fox Sports and have gone on a huge spending spree in a bold attempt to dominate the National League the way the Yankees have exercised economic dominion over the American League much of the past two decades. It's going to be hard to keep up on the combined $45 million or so the Nats will receive next year in rights fees and their percentage of the MASN profits.

The Orioles will receive the exact same rights fee as the Nats, but they own 86 percent of the network and receive six times as much profit from their equity stake.

That doesn't seem fair, of course, unless you take into consideration that the Peter Angelos ownership group bought the Orioles for a then-record price ($173 million) with the understanding that the Orioles would be the only team in the Baltimore/Washington market. When Major League Baseball took ownership of the Montreal Expos and decided to move it to D.C., the one-sided deal was struck to ensure the economic security of the Orioles. The incoming Nationals ownership group signed it without public complaint.

The current dispute has arisen because the parties are in a "reset" period during which the rights fees have to be increased based on a specific formula called for in the contract. The Nationals feel that amount does not represent fair value for their television rights and are demanding much more. Not surprisingly, the Orioles like the current arrangement just fine and have no reason — or legal motivation — to compromise.

"The only comment I will make is the comment I have made before,'' Rifkin said. "Contracts are meant to be honored. The 2005 Settlement Agreement, which sophisticated parties signed, including the Nationals and Major League Baseball, provided in clear and certain terms the formula to be applied to determine the fair market value of the rights fees for the clubs. That formula is tried and true, and fair and equitable. We have every reason to expect that it will be enforced and effectuated."

In other words, the Nationals can go sit on their hats.

Major League Baseball can't force the Orioles to sell the network, but it apparently has enlisted outside help to see if there is a solution to this problem that might be attractive to both sides. If, for example, a third party could convince Angelos to sell a controlling interest in MASN for a huge sum, the deal could be fashioned in a way that allows the teams' rights fees to be determined separately.

Anything is possible, of course, but if Angelos wanted to accept a big lump sum to give up control of the major portion of the regional television market, he had more reason to do that when the original deal was made (and that proposal was almost certainly offered) than he has now that television rights fees are trending dramatically upward.

He'll listen to any offer.

Who wouldn't?

Everything has its price, but Angelos proved during those original negotiations that he is willing to wait a long time to get what he wants, and both time and the law appear to be on his side.

Read more from columnist Peter Schmuck on his blog, "The Schmuck Stops Here" at baltimoresun.com/schmuckblog and listen when he co-hosts "The Week in Review" at noon Fridays on WBAL (1090 AM) and at wbal.com.